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To boost innovation, reward smart failures

Everyone is looking for innovation, but why are so many organizations unable to get their people to become more creative? That can't come without the risk of failure, which too many executives see as "something to be avoided," writes Doug Sundheim, a leadership consultant at Clarity Consulting.

You won't get innovation if you don't take some of the sting out of failure. That process that begins with defining "smart failures," or thoughtful and well-planned projects that for some reason don't work, but were worth trying. By defining them, employees will know the acceptable boundaries in which they can fail.

If they're not defined, "all failure looks risky and it will kill creativity and innovation," Sundheim writes. Using specific guidelines and examples will help employees clearly understand the right and wrong ways to fail.

The next step is rewarding smart failures in addition to successes. That recognition changes people's thinking about the value of taking risks. Indian conglomerate Tata launched a "Dare to Try award" in 2008 that goes to the most well-executed failed projects. Initially, few teams entered projects in that category, but seeing the Dare to Try winners being congratulated on stage by the CEO encouraged them. By 2011, 132 teams entered the category.

Finally, managers should make their approach to risk taking transparent. "As a leader, you've taken risks to get to where you are. You've had your fair share of successes and a few memorable flops. Share these with your people," Sundheim writes. "Let them see your decision process and how you weighed pros and cons. Let them know you'll support them as they experiment and learn to take smart risks."